US bolsters its Asian flank against Soviets

By
a staff correspondent of The Christian Science Monitor /
July 10, 1980

Tokyo

The United States is cautioulsy readjusting its ties with Asia's two major powers, China and Japan. Jimmy Carter's visit here, including his meeting with China's Chairman Hua, is the most visible symbol of Washington's determination to retain and increase its friendship with both nations.

The two -- onw a long-time ally, the other a newfound friend becoming something approaching an ally -- together form a potentially formidable Asian counterbalance to an increasingly powerful Soviet Union. But if the US is to strengthen the three-way relationship, it must overcome sensitive obstacles.

But there is also a strategic element in the US-Japan equation. As inflation and recession trouble the US, and as the perception of an outward-thrusting Soviet Union gathers political weight in both countries, more and more voices in the West and in Japan can be heard calling for a greater Japanese share in defending the non-communist world. This, in itself, would require a fundamental shift in the more paciist attitudes which have held sway in Japan since World War II.

The over-riding problem with China is military-strategic. How far should the US go in acceding to Peking's urgent pleas for more modern technology, especially the sort of equipment that has, or could have, military uses? How great is the risk of seriously upsetting the Russians by "tilting" too heavily and rapidly toward Moscow's former ally and now much-feared enemy, China?

There is now at least one important sign that the otherwise souring US-Japan dispute over automobiles can be put on a less disagreeable basis. Two of the world's largest automobile manufacturers, Ford and Toyota, have just announced that they are groping toward some form of joint venture to make small cars in the United States.

The two auto giants still appear some way apart. A Toyota executive announced here July 9 that the two companies might be able to reach final agreement by the end of the year. But Ford President Donald Petersen promptly poured cold water on such enthusiasm, saying that his company's preliminary assessment of the Toyota proposal suggested that it "would not make good business sense."

"The low volume involved would neither justify our investment nor support our view that a substantial percentage of the content of Japanese cars should be produced in the US market where they are sold," he declared in a statement July 9. But Mr. Petersen left the door open for further discussions.

If such an agreement eventually materializes, Japanese government and industry sources are hopeful that it will deflect mounting resentment in the US over Japanese car exports at a time of deep trouble for the American car industry.

President Carter, who is in Tokyo July 9 and 10 to attend a memorial service for the late Prime Minister Masayoshi Ohira, did not discuss bilateral trade issues when he met with acting Prime minister Masayoshi Ito July 9, Presidential spokesman Jody Powell said. However, the president underscored his concern by stopping over in Detroit en route to Tokyo and assuring car industry representatives there that the government would do what it could to help them.

Ministry of International Trade and Industry (MITI) officials cautioned that Ford and Toyota were still in the preliminary stages of negotiations. Automobile industry sources here said the two companies had agreed to set up a joint company which would be owned half and half by the two. The company would use a plant currently not being used by Ford, and its output would be around 20, 000 cars per month.

Last year Ford produced 3,075,131 cars worldwide -- about half the amount produced by General Motors, the world's largest auto manufacturer. Toyota produced 2,996,225 cars the same year.

This year Ford's production has decreased, while Toyota apparently will have no difficulty meeting its target of 3,300,00 cars. Ford is deeply in the red, while Toyota remains so profitable it has been dubbed the "Toyota bank."

The tie-up, if it materializes, represents an about face on Toyota's part. This Nagoya- based manufacturer has been the most relucant of Japan's automakers to start producing cars in the United States. Its attitude hitherto has been that if the American market for big gasoline-eating cars is depressed, this is largely the fault of American car manufactures who were unable to foresee the sudden growth of demand for small cars and unwilling to give up the profit margins associated with large cars. But there has apparently been a change of strategy by Toyota's top leadership.

Japanese cars currently account for 22 percent of all new cars being sold in the United States. In the best-selling small car sector (cars with 2,000 cubic centimeters engine displacement or less) Japanese cars account for 40 percent of total sales.

The security aspect of US-Japanese relations is also high on the list of priority topics between the two countries. Japan's probable next prime minister Zenko Suzuki, now turning to the shaping of a Cabinet that will promote harmony within the ruling Liberal Democratic Party, is said to be paying particular attention to the naming of strong foreign, finance, international trade and industry, and defense ministers.

Hitherto, defense has not been considered a particularly important or desirable portfolio. But an advisory commission named by the late Prime Minister Ohira, whose funeral prompted the Carter and Hua visits, recently reported that Japan's defense forces urgently needed qualitative improvement even at the cost of breaking the 1-percent-of-GNP (gross national product) barrier, and defense costs are likely to become a hot political issue in the next Cabinet.